Transcript FinancingToolsForSchools.ppt

Financing Tools for
Schools
Julio Rovi
The Cadmus Group, Inc.
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We Will Discuss...
• ENERGY STAR and the finance initiative
• Cost savings from energy efficiency projects
• Cost-saving examples
• Your cost-saving potential
• Internal vs. third-party financing
• BurningIndoor
your money:
of delay
Aircosts
Quality
• How EPA Tools
can helpfor Schools
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Who are you?
Why are you here?

Name, affiliation, perspective

In what capacity are you here?

What do you expect from this working session?
 Any
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additional insight you would like to share
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Key IAQ Messages from
Yesterday’s Presentations
 Indoor
air quality is a significant problem as important as
outdoor air quality.
 Indoor
air quality affects the health and productivity of
students, teachers, and staff in schools..
 There
are many actions that you can take to improve
IAQ. You need not be an expert, and many solutions are
simple and low cost, or even no cost.
 Immediate
action is needed now to prevent and solve IAQ
problems.
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Focus on 3rd Key Message
 Indoor
air quality is a significant problem, as
important as outdoor air quality.
 Indoor
air quality affects the health and productivity
of students, teachers, and staff in schools.
 There
are many actions that you can take to
improve IAQ. You need not be an expert, and
many solutions are simple and low cost, or even
no cost.
 Immediate
action is needed now to prevent and solve
IAQ problems.
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Breakdown of 3rd Key Message
 There
are many actions that you can take to
improve IAQ.
 You
need not be an expert.
 Many
solutions are simple and low cost, or
even no cost.
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Implied Component of 3rd Key
Message
 There
are many actions that you can take to improve
IAQ.
 You
need not be an expert.
 Many
solutions are simple and low cost, or even no
cost.
 Others
are expensive, perhaps very
expensive.
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The economics to justify good
indoor air are being developed.
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Human Costs of Poor IAQ
 Decreased Ability of Children
to Learn
 Decreased Effectiveness
of Teachers and Staff
 Increased Absenteeism
for Students, Teachers
and Staff
Source: IAQ TfS Training Module 1 (CD-ROM)
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Economic Costs of Poor IAQ
 Pay for Substitute Teachers and Staff
 Lower Operating Efficiency of Equipment
and Plant
 Emergency Equipment
 Consultants During an “IAQ Event”
 Absent Students Reduce Funding
 Liability
 Closing Schools and
Relocating Students
Source: IAQ TfS Training Module 1 (CD-ROM)
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Additional
Potential Costs
 Negative Media Coverage
 Angry or Frightened Parents, Staff, and Public
 Increase Risk of Legal Action by Unions or Parents
 Accountability to
School Board
and Other
Officials
Source: IAQ TfS Training Module 1 (CD-ROM)
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Financing IAQ Improvements
 Many
solutions are simple and low cost, or even
no cost.
 Others
are really expensive.
 The
economics to justify good indoor air are being
developed.
 There
are multiple ways of paying for good indoor
air, after the simple, no-cost and low-cost options
are exhausted.
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The Costs Are Real
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Common HVAC System
Problems
 Insufficient Outdoor Air Supply
 Controls Broken or
Disconnected
 Dirty Filters
 Microbiological Growth in
Drip Pans, Ductwork, Coils,
and Humidifiers
 Improper Operation
and/or Maintenance
Source: IAQ TfS Training Module 1 (CD-ROM)
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Discussion

You’ve seen the cost of poor IAQ.

Now ESTIMATE funds needed for . . .
1.
2.
3.
4.
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No-cost IAQ improvements
Low-cost IAQ improvements
Deferred maintenance
Major upgrades
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Discussion

Are the no-cost, low-cost options enough to
address IAQ problems in schools that need it?

Are IAQ investments competing with other
priorities in the school? (salaries, supplies,
equipment, transportation, etc.)

If money were not a problem, would IAQ issues
disappear?
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Categorizing Financial
Instruments

Capital Expense
 Bonds
 Loans
 QZABs

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
Operating Expense
 Lease/LeasePurchase
No Expense
 Grants
 Rebates
 Fundraisers
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Financing With “Freebies”
Bottom Line

Never really free
 Sweat and tears
 Opportunity costs
 Costs of delay

Limitations
 Not enough for substantial improvements

Issues of disparity, equity
 Gift giving is not uniform across school districts
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QZABs end Dec 2001
(Qualified Zone Academy Bonds)
Bottom Line

No interest funding
 Not for everybody


Requires issuing of a bond or equivalent debt


Time factor
Must apply


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Only for economically challenged schools
Through State Dept. of Education
Available funds may be limited
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Capital vs. Operating Budget
Capital Budget
(Debt)
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Operating Budget
(Expense)
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Financing With Capital
Bottom Line

Competitive Appropriation



Limitations


What is the school district’s rating?
Requires issuing of a bond or equivalent debt

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IAQ versus other priorities
Is the allocation enough?
Time factor
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Financing from Operations
Bottom Line
 Are
IAQ operations part of the school’s
operations?
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 IAQ
is not exactly like a utility payment.
 IAQ
is not exactly like leasing buses or copiers.
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Strategy
 Pay
for no-cost and low-cost items
from grants, rebates, and fundraisers
 Focus
on behavioral changes and
education for ALL stakeholders
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Strategy
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
Pay for expensive items from capital
and operating budgets

Focus on the best you can get that can
pay for itself
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Conundrum

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Expensive IAQ improvements
do not fit neatly into the two
sources of money:
capital and operating budgets
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Opportunity

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Most school districts are already
spending the money they need for
the more expensive portion of IAQ
improvements but do not know it.
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Common HVAC System
Problems
 Insufficient Outdoor Air Supply
 Controls Broken or
Disconnected
 Dirty Filters
 Microbiological Growth in
Drip Pans, Ductwork, Coils,
and Humidifiers
 Improper Operation
and/or Maintenance
 HVAC SYSTEMS WASTE
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ENERGY
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Capital versus Operating
Budget -- Revisited
Capital Budget
(Debt)
Operating Budget
(Expense)
What

is the approval
process?
 Board/Council
 Referendum
Ceiling on capital expenses?
Restructure capital expense
budget?
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

Already in utility payments
Easier approval process
Energy efficiency projects
may provide access to
captive funds for other
needs
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Third-Party
Financing Mechanisms

Lease-Purchase
Agreements

Benefits


Legal issues

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Non-Appropriation
Language

Performance
Contracts


Understanding the
differences
Determining the best
options for you
Not Considered
“Debt”
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Proven Success
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
More than 700 public sector institutions
partner with EPA and ENERGY STAR on
energy-efficiency efforts.

They include state agencies, higher education,
K-12, and municipalities.

Better IAQ fits transparently into a
comprehensive energy management program.
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K-12 “Million Dollar Plus” List
After making energy-efficiency upgrades, these school
districts save more than $1 million per year on their
utility bills:
Milwaukee
 Philadelphia
 San Diego
 Miami-Dade County

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Why aren’t most schools using
third-party financing?

CFOs, energy managers, and health professionals
are not talking to each other and do not know
about this type of financing.

PTAs, School Boards, and the public are
generally unaware of this unique opportunity.

Third-party financing does not ensure good IAQ.

Behavioral changes are needed while equipment
upgrades take place.
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Costs of Delay
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Calculating Costs of Delay

Every month you wait is “money out the window.”

You can save more money in the short- and longterm by installing measures TODAY using thirdparty financing rather than waiting for next year’s
budget.

The capital budget does not have to be used, and
the operating budget does not have to be exceeded.
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Next Steps
 Who

should act?
School Administrators, Health Care Officials, Community
Based Organizations, Facility Managers, Teachers, …etc.
 What
is your role?
 Where
can you contribute?
 Where
can you get training and support?
 Why
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are you waiting?
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Summary




IAQ is a serious problem
There are no-cost and lowcost solutions
Profound changes in HVAC
systems are costly
A combination of behavioral,
managerial, and technical
changes will be needed




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Significant cost savings are
possible from energy efficiency
projects
IAQ and energy efficiency are
intertwined
Third-party financing can
provide the funds for these
projects
Delaying these projects is
expensive
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Questions and Comments?
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